The No. 1 myth concerning property taxes is that the assessor sets the taxes. This is false. Assessors determine the market values upon which property taxes are based; however, several other factors are included in the equation that determines the property tax for any specific property.
These factors include budgets, property classification rates and changes in valuations for other property types within taxing jurisdictions.
Each taxing jurisdiction sets its own budget. For example, property owners in the city of Rochester are affected by the budgets for the city, the Rochester School District and Olmsted County. Commercial property owners also pay an additional tax to the state of Minnesota that contributes to K-12 school funding statewide.
Classification rates have a multiplier effect on how much certain property types pay in property taxes. Homestead agricultural land pays about half of what residential properties pay for properties that have the same taxable market value. Commercial properties pay 2.77 times the amount of property tax for the same taxable market value as homestead residential. Any conversation that leaves out the impact of classification rates is incomplete.
In 2012, many residential property owners saw their taxable market value decrease; however, their property taxes increased. This occurred because the homestead credit was replaced with a new method of providing homestead benefits through the "homestead market value exclusion." Homestead benefits were preserved, but state funding for the former homestead credit is now made up by distributing the cost to provide the homestead exclusion locally.
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It works by excluding (subtracting) value, for calculating property taxes, from the estimated market value of homesteaded properties. The maximum excluded value is $30,400, and it occurs for residential homestead properties valued at $76,000. In this instance, the property owner would pay property taxes on $45,600, which is the value after the homestead exclusion. The exclusion decreases incrementally as estimated market values increase. The exclusion zeroes out for properties valued at $413,800 and above.
Another myth is that "the assessor is viewing my property because the county needs money." This is also false. Budgets and valuations are independent of one another. The assessment determines how property taxes are distributed across property types.
State law requires that the assessor view each property once every five years. This is called the "quintile" and requires that one-fifth of all parcels in Olmsted County be inspected annually. That comes out to 13,600 per year.
Technology has been instrumental in assisting the assessor’s office in the performance of its duties. A software application known as "Pictometry" allows the appraiser to view land cover and improvements from aerial photos taken at low levels (3,000 feet) and photographed straight down and at four oblique angles of north, south, east and west. This is particularly helpful when property owners call, as our staff can readily view their properties and facilitate a more productive discussion and reach resolutions sooner.
I would like to leave the readers of this article with the knowledge that our office is here to serve the public. If you meet one of our appraisers in the field, please know that the reason they are there is to make sure that the information that property taxes are based upon is accurate and up-to-date. Our main goal is to provide a fair and equalized assessment upon which the property taxes are based.
It is my pleasure and privilege to serve the citizens of Olmsted County.
